SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
(Mark One)
[ X ] Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
[ ] Transition report under section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 33-13674-LA
VERMILLION VENTURES, INC.
(Name of small business issuer in its charter)
Nevada 68-0121636
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
5882 South 900 East, Suite 202, Salt Lake City, Utah 84121
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code 801-269-9500
Securities registered pursuant to Section 12(b) of the Exchange
Act: None
Securities registered under Section 12(g) of the Exchange Act:
$.001 par value Common Stock
(Title of class)
Check whether the Issuer (1) filed all reports required to be
filed by section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [ x ]
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is contained in this form, and no
disclosure will be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-KSB or any
amendment to this Form 10-KSB. [ X ]
The issuer's revenue for its most recent fiscal year was: $ -0-
The aggregate market value of the issuer's voting stock held as
of March 10, 2000, by non-affiliates of the issuers was $-0-.
There was no active trading market and no quote for Vermillion
Ventures, Inc. during fiscal year 1999, therefore the value is
deemed to be $-0-.
As of May 1, 2000, issuer had 116,044 shares of its $.001 par
value common stock outstanding.
Transitional Small Business Format: Yes [ ] No [ X ]
Documents incorporated by reference: None
<PAGE>
PART I
Item 1. Description of Business.
The Company was incorporated in Nevada on March 23, 1987 as
Vermillion Ventures, Inc. The Company was formed to acquire
other operating corporate entities. On March 15, 1998, the
Company acquired all of the outstanding stock of BMC Incorporated
("BMC") by issuing 129,000,000 shares of common stock. BMC was
unsuccessful in its Bingo Satellite operations and was dissolved.
During 1996, Management determined it was in the best interest of
the Company to discontinue its previous operations. The Company
is considered to have re-entered into a new development stage on
January 1, 1996. Because the Company discontinued its previous
operations and is seeking new potential business opportunities,
the Company adopted quasi-reorganization accounting procedures to
provide the Company a "fresh-start" for accounting purposes.
At the present time, the Company intends to seek,
investigate, and if warranted, acquire an interest in a business
opportunity. The Company does not propose to restrict its search
for a business opportunity to any particular industry or
geographical area and may, therefore, engage in essentially any
business in any industry. The Company has unrestricted
discretion in seeking and participating in a business
opportunity, subject to the availability of such opportunities,
economic conditions and other factors.
The selection of a business opportunity in which to
participate is complex and extremely risky and will be made by
management in the exercise of its business judgment. There is no
assurance that the Company will be able to identify and acquire
any business opportunity which will ultimately prove to be
beneficial to the Company and its shareholders.
The activities of the Company are subject to several
significant risks which arise primarily as a result of the fact
that the Company has no specific business and may acquire or
participate in a business opportunity based on the decision of
management which will, in all probability, act without the
consent, vote, or approval of the Company=s shareholders.
Sources of Opportunities
It is anticipated that business opportunities may be
available to the Company from various sources, including its
officers and directors, professional advisers, securities broker-
dealers, venture capitalists, members of the financial community,
and others who may present unsolicited proposals.
The Company will seek a potential business opportunity from
all known sources, but will rely principally on personal contacts
of its officers and directors as well as indirect associations
between them and other business and professional people.
Although the Company does not anticipate engaging professional
firms specializing in business acquisitions or reorganizations,
if management deems it in the best interests of the Company, such
firms may be retained. In some instances, the Company may
publish notices or advertisements seeking a potential business
opportunity in financial or trade publications.
Criteria
The Company will not restrict its search to any particular
business, industry or geographical location. The Company may
acquire a business opportunity or enter into a business in any
industry and in any stage of development. The Company may enter
into a business or opportunity involving a Astart up@ or new
company. The Company may acquire a business opportunity in
various stages of its operation.
In seeking a business venture, the decision of management of
the Company will not be controlled by an attempt to take
advantage of an anticipated or perceived appeal of a specific
industry, management group, or product or industry, but will be
based upon the business objective of seeking long-term capital
appreciation in the real value of the Company.
In analyzing prospective business opportunities, management
will consider such matters as the available technical, financial
and managerial resources; working capital and other financial
requirements; the history of operations, if any; prospects for
the future; the nature of present and expected competition; the
quality and
2
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experience of management services which may be available and the
depth of the management; the potential for further research,
development or exploration; the potential for growth and
expansion; the potential for profit; the perceived public
recognition or acceptance of products, services, trade or service
marks, name identification; and other relevant factors.
Generally, the Company will analyze all available factors in
the circumstances and make a determination based upon a composite
of available facts, without reliance upon any single factor as
controlling.
Methods of Participation of Acquisition
Specific business opportunities will be reviewed and, on the
basis of that review, the legal structure or method of
participation deemed by management to be suitable will be
selected. Such structures and methods may include, but are not
limited to, leases, purchase and sale agreements, licenses, joint
ventures, other contractual arrangements, and may involve a
reorganization, merger or consolidation transaction. The Company
may act directly or indirectly through an interest in a
partnership, corporation, or other form of organization.
Procedures
As part of the Company's investigation of business
opportunities, officers and directors may meet personally with
management and key personnel of the firm sponsoring the business
opportunity, visit and inspect material facilities, obtain
independent analysis or verification of certain information
provided, check references of management and key personnel, and
conduct other reasonable measures.
The Company will generally request that it be provided with
written materials regarding the business opportunity containing
such items as a description of product, service and company
history; management resumes; financial information; available
projections with related assumptions upon which they are based;
an explanation of proprietary products and services; evidence of
existing patents, trademarks or service marks or rights thereto;
present and proposed forms of compensation to management; a
description of transactions between the prospective entity and
its affiliates; relevant analysis of risks and competitive
conditions; a financial plan of operation and estimated capital
requirements; and other information deemed relevant.
Competition
The Company expects to encounter substantial competition in
its efforts to acquire a business opportunity. The primary
competition is from other companies organized and funded for
similar purposes, small venture capital partnerships and
corporations, small business investment companies and wealthy
individuals.
Employees
The Company does not currently have any employees but relies
upon the efforts of its officers and directors to conduct the
business of the Company.
Item 2. Description of Property.
The Company does not own any property. The Company
currently utilizes office space, free of charge, from officers
and directors of the Company.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
No matters were submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders.
3
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters.
There currently is no trading market for the Company=s $.001
par value common stock nor has there been a trading market for
the Company within the past two fiscal years.
As of May 1, 2000, there were 426 shareholders holding
116,044 shares of common stock.
The Company has never declared a dividend on its Common
Stock. The Company has not paid, nor declared, any dividends
since its inception and does not intend to declare any such
dividends in the foreseeable future. The Company's ability to pay
dividends is subject to limitations imposed by Nevada law. Under
Nevada law, dividends may be paid to the extent that the
corporation's assets exceed its liabilities and it is able to pay
its debts as they become due in the usual course of business.
Item 6. Management's Discussion and Analysis or Plan of
Operation.
Subsequent to December 31, 1999, the shareholders of the
Company approved to adopt quasi-reorganization accounting
procedures which allowed the Company to eliminate its previous
retained (deficit) of $701,761 against additional paid-in
capital.
The Company has $-0- cash and $2,309 in current liabilities
in the form of accounts payable. The Company did not generate
any revenue during fiscal year 1999. The Company has no material
commitments for capital expenditures for the next twelve months.
The Company believes that its current cash needs can be met
with loan and advances from officers and directors for at least
the next twelve months. However, should the Company obtain a
business opportunity, it may be necessary to raise additional
capital. This may be accomplished by loans from the principals
of the Company, debt financing, equity financing or a combination
of financing options.
Item 7. Financial Statements.
The financial statements of the Company appear at the end of
this report beginning with the Index to Financial Statements on
page F-1.
Item 8. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act.
The following tables sets forth as of May 1, 2000, the name,
age, and position of each executive officer and director and the
term of office of each director of the Company.
Name Age Position Director or Officer Since
John Lambert 45 President and Director March 1997
Kip Eardley 40 Secretary/Treasurer and March 2000
Director
All Directors hold their positions for one year or until
their successors are duly elected and qualified. All officers
holds their positions at the will of the Board of Directors.
4
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Set forth below is certain biographical information
regarding each of the Company's executive officers and directors:
John Lambert, President and Director. Mr. Lambert has been
President of the Company since March 30, 1997. For the past five
years, Mr. Lambert has been self-employed as a financial
consultant to various companies.
Kip Eardley, Secretary/Treasurer and Director. Since 1989,
Mr. Eardley has been self employed as the president and owner of
Capital Consulting of Utah, Inc. which is a consulting firm to
various public and private companies. Mr. Eardley is also
president and director of Holmes Microsystems, Inc., a publicly
traded corporation.
To the knowledge of management, during the past five years,
no present or former director, executive officer or person
nominated to become a director or an executive officer of the
Company:
(1) filed a petition under the federal bankruptcy laws or
any state insolvency law, nor had a receiver, fiscal agent
or similar officer appointed by a court for the business or
property of such person, or any partnership in which he was
a general partner at or within two years before the time of
such filing, or any corporation or business association of
which he was an executive officer at or within two years
before the time of such filing;
(2) was convicted in a criminal proceeding or named subject
of a pending criminal proceeding (excluding traffic
violations or other minor offenses);
(3) was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining
him from or otherwise limiting, the following activities;
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator,
floor broker, leverage transaction merchant, associated
person of any of the foregoing, or as an investment advisor,
underwriter, broker or dealer in securities, or as an
affiliate person, director or employee of any investment
company, or engaging in or continuing any conduct or
practice in connection with such activity; (ii) engaging in
any type of business practice; or (iii) engaging in any
activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of
federal or state securities laws or federal commodities
laws;
(4) was the subject of any order, judgment, or decree, not
subsequently reversed, suspended, or vacated, of any federal
or state authority barring, suspending, or otherwise
limiting for more than 60 days the right of such person to
engage in any activity described above under this Item, or
to be associated with persons engaged in any such activity;
(5) was found by a court of competent jurisdiction in a
civil action or by the Securities and Exchange Commission to
have violated any federal or state securities law, and the
judgment in such civil action or finding by the Securities
and Exchange Commission has not been subsequently reversed,
suspended, or vacated
(6) was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission
to have violated any federal commodities law, and the
judgment in such civil action or finding by the Commodity
Futures Trading Commission has not been subsequently
reversed, suspended or vacated.
Item 10. Executive Compensation.
No compensation has been paid to any officer or director of
the Company in the past three years. There are no compensatory
plans or arrangements, including payments to be received from the
Company, with respect to any officers or directors of the Company
which would in any way result in payments to any such person
because of his resignation, retirement, or other termination of
such person's employment with the Company, or any change in
control of the Company, or a change in the person's
responsibilities following a change in control of the Company.
5
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth as of May 1, 2000, the name
and the number of shares of the Company's Common Stock, par
value. $.001 per share, held of record, or was known by the
Company to own beneficially, more than 5% of the 116,000 issued
and outstanding shares of the Company's Common Stock, and the
name and shareholdings of each director and of all officers and
directors as a group.
Title of Name and Address of Amount and Nature of Percentage
Class Beneficial Owner Beneficial Ownership of Class
Common John Lambert (1) -0- -0-
6337 S. Highland Drive, Suite 130
Salt Lake City, Utah 84121
Common Kip Eardley (1) -0- -0-
5882 S. 900 E., Suite 202
Salt Lake City, UT 84121
Common Florence London (2) 13,130 11.31%
566 Fern Canyon Dr.
Palm Springs, CA 92264
Common Milagro Holdings 66,666 57.45%
57 West 200 South, #310
Salt Lake City, UT 84101
Common Don Rose (3) 9,395 8.10%
12345 Evensong Dr.
Los Angeles, CA 90064
Common Officers, Directors and -0- -0-
Nominees as a Group:
2 persons
(1) Officer and/or director of the Company.
(2) The shares attributed to Ms. London include 333 shares each
held in the names of Mona Ann London, Mark Brian London, Lari Sue
London and Dellabough Lisa London, her children and 3,113 shares
held in the name of Jerry London, her spouse.
(3) The shares attributed to Mr. Rose include 3,333 shares held
by Donna L. Rose, his spouse.
Item 12. Certain Relationships and Related Transactions.
The Company utilizes office space provided by the officers
and directors of the Company at no charge to the Company.
Item 13. Exhibits and Reports on Form 8-K.
Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
last calendar quarter of 1999.
Exhibits
Copies of the following documents are included as exhibits
to this report pursuant to Item 601 of Regulation S-B.
6
<PAGE>
Exhibit SEC Ref. Title of Document Location
No. No.
1 (3)(i) Articles of Incorporation Attached
2 (3)(ii) By Laws Attached
3 (27) Financial Data Schedule Attached
7
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
VERMILLION VENTURES, INC.
Date: May 26, 2000 By:/s/ John Lambert
President
Date: May 26, 2000 By:/s/ Kip Eardley
Secretary/Treasurer
In accordance with the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
Date: May 26, 2000 By:/s/ John Lambert
Director
Date: May 26, 2000 By:/s/ Kip Eardley
Director
8
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Independent Auditors' Report F-2
- Balance Sheet, December 31, 1999 F-3
- Statements of Operations, for the years ended
December 31, 1999 and 1998 and from the F-4
re-entering of development stage on
January 1, 1996 through December 31, 1999
Statement of Stockholders' (Deficit), from
the re-entering of development stage on
January 1, 1996 through December 31, 1999 F-5
- Statements of Cash Flows, for the years ended
December 31, 1999 and 1998 and from the re-entering
of development stage on January 1, 1996 through
December 31, 1999 F-6
- Notes to Financial Statements F-7-10
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
VERMILLION VENTURES, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Vermillion
Ventures, Inc. [a development stage company] at December 31,
1999, and the related statements of operations, stockholders'
(deficit) and cash flows for the years ended December 31, 1999
and 1998 and for the period from the re-entering of development
stage on January 1, 1996 through December 31, 1999. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present
fairly, in all material respects, the financial position of
Vermillion Ventures, Inc. [a development stage company] as of
December 31, 1999 and the results of its operations and its cash
flows for the years ended December 31, 1999 and 1998 and for the
period from the re-entering of development stage on January 1,
1996 through December 31, 1999, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in
Note 7 to the financial statements, the company has no on-going
operations, has incurred substantial losses since its inception
and has no working capital. These factors raise substantial
doubt about its ability to continue as a going concern.
Management's plans in regards to these matters are also described
in Note 7. The financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
PRITCHETT, SILER & HARDY, P.C.
April 26, 2000
Salt Lake City, Utah
F-2
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
1999
___________
CURRENT ASSETS:
Cash in bank $ -
___________
Total Current Assets -
___________
$ -
____________
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts Payable $ 2,309
___________
Total Current Liabilities 2,309
___________
COMMITMENTS AND CONTINGENCIES -
___________
STOCKHOLDERS' (DEFICIT):
Common stock, $.001 par value, 500,000,000
shares authorized, 116,044 shares issued
and outstanding 116
Capital in excess of par 22,424
Retained deficit (since Quasi-Reorganization in
which a deficit of $703,761, as of January 1, 1996
was eliminated) -
Deficit accumulated during the development stage (24,849)
___________
Total Stockholders' (Deficit) (2,309)
___________
$ -
____________
The accompanying notes are an integral part of this financial
statement.
F-3
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
Cumulative from
the Re-entering of
Development Stage
For the Year Ended on January 1,
December 31, 1996 through
______________________ December 31,
1999 1998 1999
__________ __________ ___________
REVENUE:
Sales $ - $ - $ -
__________ __________ __________
Total Revenue - - -
__________ __________ __________
EXPENSES:
General and administrative 2,649 2,100 24,849
__________ __________ __________
Total Expenses 2,649 2,100 24,849
__________ __________ __________
LOSS FROM OPERATIONS (2,649 ) (2,100) (24,849)
CURRENT INCOME TAXES - - -
DEFERRED INCOME TAX - - -
__________ __________ __________
NET LOSS $ (2,649) $ (2,100) $ (24,849)
__________ __________ ___________
LOSS PER SHARE $ (.02) $ (.02) $ (.26)
__________ __________ ___________
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FROM THE RE-ENTERING OF DEVELOPMENT STAGE ON
JANUARY 1, 1996 THROUGH DECEMBER 31, 1999
[RESTATED]
Deficit
Common Stock Accumulated
_______________ Capital in During the
Excess of Development
Shares Amount Par Stage
_____________________________________
BALANCE, January 1, 1996 49,377 $ 49 $ (49) -
Expenses paid by a shareholder accounted
for as contributed capital - - 100 -
Net loss for the year ended
December 31, 1996 - - - (100)
________________________________________
BALANCE, December 31, 1996 49,377 $ 49 $ 51 (100)
Issuance of 66,667 shares
of common stock for services at
$.30 per share, April 1997 66,667 $ 67 $19,933 -
Net loss for the year ended
December 31, 1997 - - - (20,000)
________________________________________
BALANCE, December 31, 1997 116,044 $ 116 $19,984 (20,100)
Net loss for the year ended
December 31, 1998 - - - (2,100)
________________________________________
BALANCE, December 31, 1998 116,004 $ 116 $19,984 (22,200)
Expenses paid by a shareholder accounted
for as contributed capital - - 2,440 -
Net loss for the year ended
December 31, 1999 - - - (2,649)
________________________________________
BALANCE, December 31, 1999 116,004 $ 116 $22,424 (24,849)
________________________________________
The accompanying notes are an integral part of this financial
statement .
F-5
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
Cumulative from
the Re-entering of
Development Stage
For the Year Ended on January 1,
December 31, 1996 through
_____________________ December 31,
1999 1998 1999
_____________________________________
Cash Flows From Operating Activities:
Net loss $ (2,649) $ (2,100) $ (24,849)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services - - 20,000
Contributed Capital 2,440 - 2,540
Changes in assets and liabilities:
Increase in accounts payable 209 2,100 2,309
________________________________
Net Cash (Used) by
Operating Activities - - -
________________________________
Cash Flows From Investing Activities:
- - -
________________________________
Net Cash (Used) by
Investing Activities - - -
________________________________
Cash Flows From Financing Activities:
- - -
________________________________
Net Cash Provided by
Financing Activities - - -
________________________________
Net Increase in Cash - - -
Cash at Beginning of the Year - - -
________________________________
Cash at End of the Year $ - $ - $ -
________________________________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For 1999:
None
For 1998:
None
The accompanying notes are an integral part of these financial
statements.
F-6
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Vermillion Ventures, Inc. (the Company) was
organized under the laws of the State of Nevada on March 23,
1987. The Company was formed to acquire other operating
corporate entities. On March 15, 1988 The Company acquired all
of the outstanding stock of BMC Incorporated (BMC) by issuing
129,000,000 shares of common stock. BMC was unsuccessful in its
satellite bingo operations and was dissolved. During 1996,
Management determined it was in the best interest of the Company
to discontinue its previous operations. The Company is
considered to have re-entered into a new development stage on
January 1,1996. Because the Company discontinued its previous
operations and is seeking new potential business opportunities,
the Company adopted quasi-reorganization accounting procedures to
provide the Company a "fresh-start" for accounting purposes.
Development Stage - The Company is considered a development stage
company as defined in SFAS no. 7.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented, in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" [See Note 7].
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles required
management to make estimates and assumptions that effect the
reported amounts of assets and liabilities, the disclosures of
contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimated by management.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 132, "Employer's Disclosure about
Pensions and Other Postretirement Benefits", SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities",
SFAS No. 134, "Accounting for Mortgage-Backed Securities.", SFAS
No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections", SFAS No. 136, "Transfers of Assets to a not for
profit organization or charitable trust that raises or holds
contributions for others", and SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - deferral of the
effective date of FASB statement No. 133 ( an amendment of FASB
Statement No. 133.)," were recently issued. SFAS No. 132, 133,
134, 135, 136 and 137 have no current applicability to the
Company or their effect on the financial statements would not
have been significant.
F-7
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - QUASI-REORGANIZATION
Subsequent to December 31, 1999 the shareholders of the Company
approved to adopted quasi-reorganization accounting procedures.
Quasi-reorganization accounting allowed the Company to eliminate
its previous retained (deficit) of $701,761 against additional
paid-in capital. Therefore, the adoption of quasi-reorganization
accounting procedures gave the Company a "fresh start" for
accounting purposes. The Company is also considered as re-
entering a new development stage on January 1, 1996, as it
discontinued all of its previous bingo operations. These
financial statements have been restated to reflect the change.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes" which requires the liability approach for the
effect of income taxes.
The Company has available at December 31, 1999, unused operating
loss carryforwards of approximately $24,800, which may be applied
against future taxable income and which expire in various years
through 2019. If certain substantial changes in the Company's
ownership should occur, there could be an annual limitation on
the amount of net operating loss carryforward which can be
utilized. The amount of and ultimate realization of the benefits
from the operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards (approximately $8,400) at December 31,
1999 and, therefore, no deferred tax asset has been recognized
for the loss carryforwards. The change in the valuation
allowance is equal to the tax effect of the current period's net
loss (approximately $900 and $700 for 1999 and 1998,
respectively).
NOTE 4 - COMMON STOCK
On April 29, 1997 the company issued 66,667 shares of its
previously authorized but unissued common stock for services
rendered valued at $20,000 (or $.30 per share). The stock
issuance resulted in a change of control of the Company.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods presented, the
Company did not pay any compensation to its officers and
directors.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his office as a mailing address, as needed, at no
expense to the Company.
Capital Contributions - A shareholder paid expenses on behalf of
the Company, of $2,440 in 1999 and $100 in 1996. These have been
accounted for as contributions to capital.
F-8
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - COMMENTS AND CONTINGENCIES
Management believes that the Company is not liable for any
existing liabilities related to its former discontinued
operations. The Company is not currently named nor is it aware
of any such claims or suits against the Company. No amounts have
been reflected or accrued in these financial statements for any
contingent liability.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern.
However, the Company has no on-going operations and has incurred
losses since its inception. Further, the Company has no working
capital to pay its expenses. These factors raise substantial
doubt about the ability of the Company to continue as a going
concern. In this regard, management is proposing to raise any
necessary additional funds not provided by operations through
loans or through sales of its common stock or through a possible
business combination with another company. There is no assurance
that the Company will be successful in raising this additional
capital or achieving profitable operations. The financial
statements do not include any adjustments that might result from
the outcome of these uncertainties.
NOTE 8 - EARNINGS (LOSS) PER SHARE
The following data show the amounts used in computing income
(loss) per share and the effect on income and the weighted
average number of shares of dilutive potential common stock for
the years ended December 31, 1999 and 1998 and for the period
from the re-entering of development stage on January 1, 1996
through December 31, 1999:
Cumulative from
the Re-entering of
Development Stage
For the Year Ended on January 1,
December 31, 1996 through
___________________ December 31,
1999 1998 1999
__________________________________
Loss from continuing operations available
to common stockholders (numerator) $ (2,649) $ (2,100) $ (24,849)
________________________________
Weighted average number of common
shares outstanding used in earnings
per share calculation during the period
(denominator) 116,044 116,044 93,943
________________________________
Dilutive earnings per share was not presented, as the Company had
no common equivalent shares for all periods presented that would
effect the computation of diluted earnings (loss) per share.
F-9
<PAGE>
VERMILLION VENTURES, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - SUBSEQUENT EVENTS
During May 2000 the shareholders approved a 1 for 3,000 reverse
stock split along with the approval of adoption of quasi-
reorganization accounting procedures. The financial statements
for all periods presented have been restated to reflect the
change.
F-10
<PAGE>
Exhibit 1
Form 10-KSB
Vermillion Ventures, Inc.
ARTICLES OF INCORPORATION
OF
VERMILLION VENTURES, INC.
I, THE UNDERSIGNED, natural person, acting as incorporator of
a Corporation under Nevada's General Corporations Law (hereinafter
called the Act), adopt the following Articles of Incorporation for
such Corporation.
ARTICLE I
CORPORATE NAME
The name of the Corporation is:
VERMILLION VENTURES, INC.
ARTICLE II
DURATION OF CORPORATION
The duration of this corporation is "perpetual".
ARTICLE III
CORPORATE PURPOSES
The purpose for which this corporation is organized is to do
all things and engage in all lawful transactions which a
corporation under the laws of the State of Nevada night do or
engage in.
ARTICLE IV
CAPITALIZATION
The aggregate number of shares which this Corporation shall
have authority to issue is 500,000,000 Common Shares having a par
value of $.001 per share. Each share of stock shall entitle the
holder thereof to one (1) vote on each matter submitted to a vote
at a meeting of the shareholders. All stock of the Corporation
shall be of the same class and shall have the same rights and
preferences. The capital stock of the Corporation shall be issued
as fully paid, and the private property of the shareholders shall
not be liable for the debts, obligations or liabilities of the
Corporation. Fully paid stock of this Corporation shall not be
liable to any further call or assessment.
E-1
<PAGE>
ARTICLE V
VOTING RIGHTS
At every meeting of the shareholders, every holder of the
Common Stock shall be entitled to one (1) vote for each share of
Common Stock registered in his name on the stock transfer books of
the Corporation except in the extent that the voting rights of the
shares are limited or denied by the Act. At each election for
Directors, every such holder of the Common Stock shall have the
right to vote, in person or by proxy, the number of shares owned
by him for each Director to be elected and for whose election he
has a right to vote, but the shareholder shall have no right to
accumulate his or its votes with regard to such election.
ARTICLE VI
PRINCIPAL OFFICE AND AGENT
The address of this Corporation's initial registered office
and name of its original registered agent at such address is:
Gateway Enterprises, Inc.
2050 Ellis Way
Elko County
Elko, Nevada
ARTICLE VII
DIRECTORS
The Board of Directors shall consist of not less than three
(3) members. The Board of Directors may from time to time
determine the number of Board members. The names and addresses of
persons who are to serve as Directors until the first meeting of
the stockholders, or until their successors be elected and qualify
are:
Brian L. Johnson
1860 Oakmead Drive #11
Concord, CA 94520
Kari B. Rojas
5472 F RoundTree Plaza
Concord, CA 94521
Racine Linville
325 West 100 North Circle #1B
American Fork, Utah 84003
E-2
<PAGE>
ARTICLE VIII
INCORPORATOR
The name and address of the Incorporator is:
Racine Linville
325 West 100 North Circle #1B
American Fork, Utah 84003
ARTICLE IX
PREEMPTIVE RIGHTS ABOLISHED
Shareholders shall have no preemptive rights.
DATED this 16th day of March, 1987.
/s/ Racine Linville,
Incorporator
STATE OF UTAH )
)ss.
COUNTY OF UTAH )
I, THE UNDERSIGNED, a Notary Public, hereby certify that
Racine Linville personally appeared before me, who being by me
first duly sworn severally declared that she is the person who
signed the foregoing document as incorporator and that the
statements therein contained are true.
DATED this 16th day of March, 1987.
/s/ Notary Public
E-3
<PAGE>
Exhibit 2
Form 10-KSB
Vermillion Ventures, Inc.
BY LAWS
OF
VERMILLION VENTURES INC.
ARTICLE I - OFFICES
The office of the Corporation shall be located in any city
and state designated by the Board of Directors. The Corporation
may also maintain other offices at such other places within or
without the United States as the Board of Directors may, from time
to time, determine.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held, if
called by the Board of Directors within five months after the
close of the fiscal year of the Corporation, for the purpose of
electing directors and transacting such other business as may
properly come before the meeting.
2. SPECIAL MEETINGS
Special meetings of the stockholders, for any purpose or
purposes unless otherwise prescribed by statute, may be called by
the president or by the directors, and shall be called by the
president at the request of the holders of not less than 10
percent of all the outstanding shares of the corporation entitled
to vote at the meeting.
3. PLACE OF MEETING
The directors may designate any place, either within or
without the state unless otherwise prescribed by statute, as the
place of meeting for any annual meeting or for any special meeting
called by the directors. A waiver of notice, signed by all
stockholders entitled to vote at a meeting, may designate any
place, either within or without the state unless otherwise
prescribed by statute, as the place for holding such meeting. If
no designation is made or if a special meeting be otherwise
called, the place of meeting shall be the principle office of the
corporation.
4. NOTICE OF MEETING
Written or printed notice stating the place, day and hour of
the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not
less than 10 nor more than 50 days before the date of the meeting,
either personally or by mail, by or at the direction of the
president or the secretary or the officer or persons calling the
meeting, to each stockholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the
stockholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
E-4
<PAGE>
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE
For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment
of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the directors of the
corporation may provide that the stock transfer books shall be
closed for a stated period but not to exceed, in any case, 30
days. If the stock transfer books shall be closed for the purpose
of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least
15 days immediately preceding such meeting. In lieu of closing the
stock transfer books, the directors may fix in advance a date as
the record date for any such determination of stockholders. Such
date in any case to be not more that 45 days and, in case of a
meeting of stockholders, not less than 15 days prior to the date
on which the particular action requiring such determination of
stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the
date on which notice of the meeting is mailed or the date on which
the resolution of the directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of stockholders. When a determination of
stockholders entitled to vote at any meeting of stockholders has
been made as provided in this section, such determination shall
apply to any adjournment thereof.
6. QUORUM
At any meeting of stockholders, 50% of the outstanding shares
of the corporation are entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of stockholders.
If less than said number of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified. The stockholders
present at a duly organized meeting nay continue to transact
business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
7. PROXIES
At all meetings of stockholders, a stockholder may vote by
proxy, executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the meeting.
8. VOTING
Each stockholder entitled to vote in accordance with the
terms and provisions of the certificate of incorporation and these
by-laws shall be entitled to one vote, in person or by proxy, for
each share of stock entitled to vote held by such stockholders.
Upon the demand of any stockholder, the vote for directors and
upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by majority vote; all
other questions shall be decided by majority vote except as
otherwise provided by the Certificate of Incorporation or the laws
of this state.
E-5
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed
by its board of directors. The directors shall, in all cases, act
as a board and they may adopt such rules and regulations for the
conduct of their meetings and the management of the corporation,
as they nay deem proper, not inconsistent with these By Laws and
the laws of this state.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be a minimum
of three and a maximum of twenty-five. Each director shall hold
their office until the next annual meeting of stockholders and
until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors shall be held without
other notice than this By Law, immediately after and at the same
place as the annual meeting of stockholders. The directors may
provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the
request of the president or any two directors. The person or
persons authorized to call special meetings of the directors may
fix the place for holding any special meeting of the directors
called by them.
5. NOTICE
Notice of any special meeting shall be given at least 5 days
previously thereto by written notice delivered personally or by
telegram or mailed to each director at his business address. If
nailed, such notice shall be deemed to be delivered when deposited
in the United State's mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the
telegraph company. The attendance of a director at a meeting shall
constitute a waiver of a notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not
lawfully called or convened.
6. QUORUM
At any meeting of the directors, a majority of the directors
shall constitute a quorum for the transaction of business, but if
less than said number is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice.
E-6
<PAGE>
7. MANNER OF ACTING
The act of the majority of the directors present at a meeting
at which a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the
number of directors and vacancies occurring in the board for any
reason except the removal of directors without cause, may be
filled by a vote of a majority of the directors when in office,
although less than a quorum exists. Vacancies occurring by reason
of the removal of directors without cause shall be filled by vote
of the stockholders. A director elected to fill a vacancy caused
by resignation, death or removal shall be elected to hold office
for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS
Any or all of the directors may be removed for cause by vote
of the stockholders or by action of the board. Directors may be
removed without cause only by vote of the stockholders.
10. RESIGNATION
A director may resign at any time by giving written notice to
the board, the president or the secretary of the corporation.
Unless otherwise specified in the notice, the resignation shall
take effect upon receipt thereof by the board or such officer, and
the acceptance of the resignation shall not be necessary to make
it effective.
11. COMPENSATION
No compensation shall be paid to directors, as such, for
their services, but by resolution of the board a fixed sun and
expenses for actual attendance at each regular or special meeting
of the board may be authorized. Nothing herein contained shall be
construed to preclude any director from serving the corporation in
any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT
A director of the corporation who is present at a meeting of
the directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless
he shall file his written dissent to such action with the person
acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the
secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
E-7
<PAGE>
13. EXECUTIVE AND OTHER COMMITTEES
The board, by resolution, may designate from among its
members an executive committee and other committees, each
consisting of three or more directors. Each such committee shall
serve at the pleasure of the board.
ARTICLE IV - OFFICERS
1. NUMBER
The officers of the corporation shall be a president, a vice-
president, a secretary and a treasurer, each of whom shall be
elected by the directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by
the directors. Any two or more offices may be held by the same
person.
2. ELECTION AND TERM OF OFFICE
The officers of the corporation, to be elected by the
directors, shall be elected at a meeting of the directors held
when determined by the directors. Each officer shall hold office
until his successor shall have been duly elected and shall have
qualified, or until his death, or until he shall resign or shall
have been removed in the manner hereinafter provided.
3. REMOVAL
Any officer or agent elected or appointed by the directors
may be removed by the directors whenever, in their judgement, the
best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract rights, if
any, of the person so removed.
4. VACANCIES
A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the
directors for the unexpired portion of the term.
5. SALARIES
The salaries of the officers shall be fixed, from time to
time, by the directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a
director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS
The directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
E-8
<PAGE>
2. LOANS
No loans shall be contracted on behalf of the corporation and
no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the directors. Such authority may be
general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to
time be determined by resolution of the directors.
4. DEPOSITS
All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in
such banks, trust companies or other depositories as the directors
may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES
Certificates representing shares of the corporation shall be
in such form as shall be determined by the directors. Such
certificates shall be signed by the president and by the secretary
or by such other officers authorized by law and by the directors.
All certificates for shares shall be consecutively numbered or
otherwise identified. The names and addresses of the stockholders,
the number of shares and date of issue, shall be entered on the
stock transfer books of the corporation for transfer shall be
canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been
surrendered and canceled, except that in case of a lost, destroyed
or mutilated certificate, a new one may be issued therefor upon
such terms and indemnity to the corporation as the directors may
prescribe.
2. TRANSFERS OF SHARES
(a) Upon surrender to the corporation or the transfer agent
of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty, of the corporation to
issue a new certificate to the person entitled thereto and cancel
the old certificate; every such transfer shall be entered on the
transfer book of the corporation which shall be kept at its
principal office.
(b) The corporation shall be entitled to treat the holder of
record of any share as the holder in fact thereof, and,
accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
E-9
<PAGE>
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall end on the 31st day
of December in each year.
ARTICLE VIII - DIVIDENDS
The directors may, from time to time, declare and the
corporation may pay dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
corporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any stockholder or director of the
corporation under the provisions of these By Laws or under the
provisions of the Articles of Incorporation, a waiver thereof in
writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
These By Laws may be altered, amended or repealed and new By
Laws may be adopted by a vote of the stockholders representing a
majority of all the shares issued and outstanding, at any annual
stockholders' meeting or at any special stockholders' meeting when
the proposed amendment has been set out in the notice of such
meeting.
This is to certify that the foregoing is a true and correct
copy of the By Laws of the Corporation named in the title of these
By Laws and that such By Laws were duly adopted by the Board of
Directors of such Corporation on March 26, 1987
/s/ Secretary
E-10
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 2,309
<BONDS> 0
0
0
<COMMON> 116
<OTHER-SE> (2,425)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,649)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,649)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,649)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
